Monday, July 12, 2010

For filers wanting clarification on the different types of bankruptcy, here is some chapter 7 bankruptcy information. Chapter 7 bankruptcy is popular with people who have very little property or assets to protect because it is actually possible to keep everything you own.

I filed a chapter 7 bankruptcy because I fell into this category. Mine was what is known as a simple 7 no asset case. What type is best for you will depend on your individual circumstances and it is best to consult a chapter 7 bankruptcy attorney when making this determination.

In a chapter 7 bankruptcy you are petitioning the bankruptcy court to discharge all or most of your debt*. The bankruptcy trustee may take any property that you own that is not exempt from collection in order to sell it and distribute the money to your creditors. I will discuss exemptions in another post but you should know that different states have different exemptions and 15 states also allow you to choose federal exemptions over state if you want. California is not one of these states.

You will not be able to file chapter 7 bankruptcy unless you meet the eligibity requirements. If, after taking a means test, it is determined that you are able to pay back all of some of your debt to your creditors over a five year period, you will have to file a chapter 13 bankruptcy instead. However, if you if you have secured debts of more than $1,010,650 and/or unsecured debts of more than $336,900, you cannot file a chapter 13 bankruptcy.

If you qualify for and have a successful chapter 7 bankruptcy, you will probably be discharged about 3 months from the date of filing but there are no guarantees. My case, simple as it was, was not discharged for a full six months. California bankruptcy courts tend to be backed up, especially in the central district.

*Not all debt is dischargable. Some examples of non-dischargable debts are student loans, recent taxes, child support & alimony, and criminal fines.